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SMSF STRATEGY GUIDE

SMSF CONTRIBUTION LIMITS

BACKGROUND

For a number of years now, there has been a limit placed on much members can contribute to their SMSF. These are known as the super contribution limits, or contribution caps. These limits or caps have changed a number of times since they were introduced. Below are the current limit levels.

CONCESSIONAL CONTRIBUTIONS

Maximum Limit
$25,000 pa

Carry Forward Provisions (balances under $500,000)
Starting from 1 July 2018, members can carry forward any unused concessional contributions cap over a rolling previous 5 year period – but only where their total super fund balance is less that $500,000 at 30 June of the year prior to the contribution.

 

What if you exceed the limit?

There are a number of aspects to this, but just very briefly here - the excess amount is added back to the member's assessable income and will be taxed at their marginal tax rate, with a rebate that relates to the 15% contributions tax paid on that amount by the SMSF. The excess (net of any contributions tax) can be refunded by the SMSF, but its not compulsory. If not refunded, it is treated as a non-concessional contribution and is part of those limits.
 

NON-CONCESSIONAL CONTRIBUTIONS

Maximum Limit
$100,000 pa if total super balance is under $1.6 million.

Bring Forward Provisions (balances under $1.4m to $1.5m)
If a member is under age 65 on 1 July that financial year and their total super balance is under $1.4m, they can bring forward an additional 2 years of their non-concessional contribution cap for 3 years in total. So instead of only being able to contribute $100,000 that year, they can contribute up to $300,000. They can do this in one go, or in separate amounts over 3 years. If their balance is between $1.4m and $1.5m, then only one year can bring forward (so a $200,000 total contribution). And if between $1.5m and $1.6m, then no bring forward applies. They just have the regular $100K cap for that year.

 

What if a member exceeds the limit?

Again, they can elect to receive a refund of the excess amount from their SMSF, plus 85% of any associated earnings from that excess amount (as the earnings are generally subject to 15% tax in the fund). This associated earnings amount is included in their assessable income taxed at marginal rates, less the 15% offset. If they don't elect to have the excess refunded, they will face a punitive 47% tax on the excess amount.

GOVERNMENT
CO-CONTRIBUTION

Maximum Limit

$500 received from the Government, if a member makes a $1,000 non-concessional contribution and meets the eligibility criteria.

DOWNSIZER CONTRIBUTIONS

Maximum Limit

$300,000 for each person;

 

This can become $600,000 for a couple, as it's fine for each spouse to make contributions, even if the house was only in one name.

CGT CAP - SMALL BUSINESS CONCESSIONS

Maximum Limit

$1,515,000 lifetime limit

 

Retirement exemption component itself has a limit of $500,000.

What if you exceed the limits

Excess amounts will be treated as non-concessional contributions and are then subject to those limits and excess provisions.